If you’re beginning your journey as a first home owner it can be quite daunting to know everything. It can seem that at every stage of the journey more questions arise. That is why at Clarity we pride ourselves on providing many first home owner tips! One thing that people tend to overlook is the fact that your dream home may have tenants in and when that happens there are a lot of important questions that you should be thinking about.
The first thing to do is to find out whether the property is being sold subject to the Lease (with tenants living there after you complete your transfer) or is it being sold to you with vacant possession (no tenants). You can ask the selling agent and it should also be specified in the contract.
If it is being sold with vacant possession, then it is the responsibility of the owner/vendor to make the arrangements to end the lease so that the tenant can move out before your settlement date.
If the house is being sold to you with the lease, then there are a number of things you should consider. These include:
• When does the lease end – i.e., how long after your settlement date will the lease continue?
• Are you prepared to wait that long before you can move in?
• What if you have difficulty getting the tenant to leave?
• Will you have a place to live while you wait for the lease to finish and the tenant to move out?
If this is your first property investment you may be looking to utilise some of the government incentives for first home buyers and one of these includes the First Home Owner Grant. A key clause of this grant is that you must reside in the property you purchase within 12 months of purchasing. So being able to know that you can easily ask a tenant to leave during this time is important!
Buying a property with tenants doesn’t have to be difficult. You just need to know what it may involve. In short – if you are buying your home so you can live in it as soon as you complete your settlement, then you should reconsider buying a property that is subject to a lease. If you are looking to invest in real estate that is subject to lease, which will remain in place after your settlement, make sure you have somewhere to reside until the lease runs out and the tenant moves.
There are many ways for Victorian first home buyers to get their foot in the door with property investments. You just need to know what is involved with various property options and weigh up all the pros and cons. Also remember – we’re here to help you along the way. Browse our knowledge centre and find all the answers to the questions you have around buying your first home and property investing. You can also engage with us through our Advice centre and we can help you by looking over your contracts and answering those really tricky questions!